“(3A)Each annual report prepared by the NHS foundation trust must give 5information on the impact that income received by the trust otherwise than from the provision of goods and services for the purposes of the health service in England has had on the provision by the trust of goods and services for those purposes.”

(4)Omit subsections (4) to (7) of that section (goods and services that may be 10authorised, etc.).

(5)For the title to that section substitute “Provision of goods and services”.

(6)In paragraph 2 of Schedule 7 to that Act (constitution), the existing text of which becomes sub-paragraph (1), after that sub-paragraph insert—

“(2)If the corporation is an NHS foundation trust, the constitution must 15specify its principal purpose (as to which, see section 43(1)).”

165Information

For section 48 of the National Health Service Act 2006 (information) 30substitute—

“48Information

(1)The Secretary of State may require an NHS foundation trust to provide the Secretary of State with such information as the Secretary of State considers it necessary to have for the purposes of the functions of the 35Secretary of State in relation to the health service.

(2)The information must be provided in such form, and at such time or within such period, as the Secretary of State may require.”

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166Significant transactions

51ASignificant transactions

(1)An NHS foundation trust may enter into a significant transaction only 5if more than half of the members of the council of governors of the trust voting approve entering into the transaction.

(2)“Significant transaction” means a transaction or arrangement of such description as may be specified in the trust’s constitution.

(3)If an NHS foundation trust does not wish to specify any descriptions of 10transaction or arrangement for the purposes of subsection (2), the constitution of the trust must specify that it contains no such descriptions.”

Mergers, acquisitions, separations and dissolution

167Mergers

(1)15In section 56 of the National Health Service Act 2006 (mergers), in subsection (1)—

(b)for the words from “authorisation” to the end substitute “the 20dissolution of the trusts and the establishment of a new NHSfoundation trust.”

(2)After that subsection insert—

“(1A)An application under this section may be made only with the approval of more than half of the members of the council of governors of each 25applicant (that is an NHS foundation trust).”

(3)In subsection (2) of that section, omit—

(a)paragraph (c) (but not the “and” following it), and

(b)the words from “and must give” to the end.

(4)Omit subsection (3) of that section.

(5)30For subsection (4) of that section substitute—

“(4)The regulator must grant the application if it is satisfied that such steps as are necessary to prepare for the dissolution of the trusts and the establishment of the proposed new trust have been taken.”

(6)Omit subsections (5) to (10) of that section.

(7)35In subsection (11) of that section, for “On an authorisation being given under this section” substitute “On the grant of the application”.

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168Acquisitions

After section 56 of the National Health Service Act 2006 insert—

“56AAcquisitions

(1)An application may be made jointly by—

(a)5an NHS foundation trust (A), and

(b)another NHS foundation trust or an NHS trust established under section 25 (B),

to the regulator for the acquisition by A of B.

(2)An application under this section may be made only with the approval 10of more than half of the members of the council of governors of each applicant (that is an NHS foundation trust).

(3)The application must—

(a)be supported by the Secretary of State if B is an NHS trust, and

(b)be accompanied by a copy of the proposed constitution of A, 15amended on the assumption that A acquires B.

(4)The regulator must grant the application if it is satisfied that such steps as are necessary to prepare for the acquisition have been taken.

(5)On the grant of the application, the proposed constitution has effect, but where a person who is specified as a director of A in the 20constitution has yet to be appointed as such, the directors of A may exercise that person’s functions under the constitution.”

169Separations

After section 56A of the National Health Service Act 2006 insert—

“56BSeparations

(1)25An application may be made to the regulator by an NHS foundation trust for the dissolution of the trust and the establishment of two or more new NHS foundation trusts.

(2)An application under this section may be made only with the approval of more than half of the members of the council of governors of the 30applicant.

(3)The application must, by reference to each of the proposed new trusts—

(a)specify the property and liabilities proposed to be transferred to it;

(b)be accompanied by a copy of its proposed constitution.

(4)35The regulator must grant the application if it is satisfied that such steps as are necessary to prepare for the dissolution of the trust and the establishment of each of the proposed new trusts have been taken.

(5)On the grant of the application, the proposed constitution of each of the new trusts has effect but, in the case of each of the new trusts, the 40proposed directors may exercise the functions of the trust on its behalf until a board of directors is appointed in accordance with the constitution.”

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170Dissolution

After section 57 of the National Health Service Act 2006 insert—

“57ADissolution

(1)An application may be made by an NHS foundation trust to the 5regulator for dissolution.

(2)An application under this section may be made only with the approval of more than half of the members of the council of governors of the applicant.

(3)The regulator must grant the application if it is satisfied that—

(a)10the trust has no liabilities, and

(b)such steps as are necessary to prepare for the dissolution have been taken.

(4)Where an application under this section is granted, the regulator must make an order—

(a)15dissolving the trust in question, and

(b)transferring, or providing for the transfer of, the property of the trust (if any) to the Secretary of State.”

171Supplementary

(1)In section 57 of the National Health Service Act 2006 (mergers: 20supplementary), in subsection (1)—

(a)for “an authorisation is given under section 56” substitute “an application is granted under section 56 or 56B”, and

(b)at the end insert “or trusts”.

(2)In subsection (2) of that section—

(a)25for “such an authorisation is given, the Secretary of State” substitute “such an application is granted, the regulator”, and

(b)in paragraph (a), after “dissolving the” insert “trust or”, and

(c)in paragraph (b), at the end insert “or trusts”.

(3)After that subsection insert—

“(2A)30An order under section 56 or 56B is conclusive evidence of incorporation and conclusive evidence that the corporation is an NHSfoundation trust.”

“(1)This section applies if the regulator is satisfied that an NHS foundation trust is, or is likely to become, unable to pay its debts.

(2)The regulator may make an order authorising the appointment of a trust special administrator to exercise the functions of the governors, 15chairman and directors of the trust.

(3)As soon as reasonably practicable after the making of an order under subsection (2), the Care Quality Commission must provide to the regulator a report on the safety and quality of the services that the trust provides under this Act.”

(4)20In subsection (4) of that section—

(a)for “giving a notice” substitute “making an order”,

(b)after paragraph (a) insert—

“(aa)the Board,”,

(c)omit paragraph (b),

(d)25in paragraph (c), omit “goods or”, and

(e)after paragraph (c) insert “, and

(d)the Care Quality Commission.”

(5)After that subsection insert—

“(5)An order under subsection (2) must specify the date when the 30appointment is to take effect, which must be within the period of 5 working days beginning with the day on which the order is made.

(6)The regulator must lay before Parliament (with the statutory instrument containing the order) a report stating the reasons for making the order.

(7)35If the regulator makes an order under subsection (2), it must—

(a)appoint a person as the trust special administrator with effect from the day specified in the order, and

(b)publish the name of the person appointed.

(8)A person appointed as a trust special administrator under this section 40holds and vacates office in accordance with the terms of the appointment.

(9)A person appointed as a trust special administrator under this section must manage the trust’s affairs, business and property, and exercise the trust special administrator’s functions, so as to achieve the objective set

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out in section 65DA as quickly and as efficiently as is reasonably practicable.

(10)When the appointment of a trust special administrator under this section takes effect, the trust’s governors, chairman and executive and 5non-executive directors are suspended from office; and Chapter 5 of this Part, in its application to the trust, is to be read accordingly.

(11)But subsection (10) does not affect the employment of the executive directors or their membership of any committee or sub-committee of the trust.

(12)10The regulator may indemnify a trust special administrator appointed under this section in respect of such matters as the regulator may determine.”

(6)For the title to that section substitute “NHS foundation trusts: appointment of trust special administrator”.

(7)15Omit the cross-heading preceding that section.

174Objective of trust special administration

After section 65D of the National Health Service Act 2006 insert—

“65DA Objective of trust special administration

(1)The objective of a trust special administration is to secure—

(a)20the continued provision of such of the services provided for the purposes of the NHS by the NHS foundation trust that is subject to an order under section 65D(2), at such level, as the commissioners of those services determine, and

(b)that it becomes unnecessary for the order to remain in force for 25that purpose.

(2)The commissioners may determine that the objective set out in subsection (1) is to apply to a service only if they are satisfied that the criterion in subsection (3) is met.

(3)The criterion is that ceasing to provide the service under this Act 30would, in the absence of alternative arrangements for its provision under this Act, be likely to—

(a)have a significant adverse impact on the health of persons in need of the service or significantly increase health inequalities, or

(b)35cause a failure to prevent or ameliorate either a significant adverse impact on the health of such persons or a significant increase in health inequalities.

(4)In determining whether that criterion is met, the commissioners must (in so far as they would not otherwise be required to do so) have regard 40to—

(a)the current and future need for the provision of the service under this Act,

(b)whether ceasing to provide the service under this Act would significantly reduce equality between those for whom the 45commissioner arranges for the provision of services under this

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Act with respect to their ability to access services so provided, and

(c)such other matters as may be specified in relation to NHSfoundation trusts in guidance published by the regulator.

(5)5The regulator may revise guidance under subsection (4)(c) and, if it does so, must publish the guidance as revised.

(6)Before publishing guidance under subsection (4)(c) or (5), the regulator must obtain the approval of—

(a)the Secretary of State;

(b)10the Board.

(7)The Board must make arrangements for facilitating agreement between commissioners in determining the services provided by the trust under this Act to which the objective set out in subsection (1) is to apply.

(8)Where commissioners fail to reach agreement in pursuance of 15arrangements under subsection (7), the Board may make the determination (and the duty imposed by subsection (1)(a), so far as applying to the commissioners concerned, is to be regarded as discharged).

(9)In this section—

20“commissioners” means the persons to which the trust provides services under this Act, and

“health inequalities” means the inequalities between persons with respect to the outcomes achieved for them by the provision of services that are provided as part of the health service.”

17525Procedure etc.

(1)In section 65F of the National Health Service Act 2006 (administrator’s draft report), in subsection (2)—

(a)before paragraph (a) insert—

“(za)the Board,”, and

(b)30omit paragraph (a) (but not the following “and”).

(2)At the end of that section insert—

“(4)For the purposes of this section in its application to the case of an NHSfoundation trust, the references to the Secretary of State are to be read as references to the regulator.

(5)35In the case of an NHS foundation trust, the administrator may not provide the draft report to the regulator under subsection (1)—

(a)without having obtained from each commissioner a statement that the commissioner considers that the recommendation in the draft report would achieve the objective set out in section 4065DA, or

(b)where the administrator does not obtain a statement to that effect from one or more commissioners (other than the Board), without having obtained a statement to that effect from the Board.

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(6)Where the Board decides not to provide to the administrator a statement to that effect, the Board must—

(a)give a notice of the reasons for its decision to the administrator and to the regulator;

(b)5publish the notice;

(c)lay a copy of it before Parliament.

(7)In subsection (5), “commissioner” means a person to which the trust provides services under this Act.”

(3)At the end of section 65G of that Act (consultation plan) insert—

“(4)10In the case of an NHS foundation trust, the administrator may not make a variation to the draft report following the consultation period—

(a)without having obtained from each commissioner a statement that the commissioner considers that the recommendation in the draft report as so varied would achieve the objective set out 15in section 65DA, or

(b)where the administrator does not obtain a statement to that effect from one or more commissioners (other than the Board), without having obtained a statement to that effect from the Board.

(5)20Where the Board decides not to provide to the administrator a statement to that effect, the Board must—

(a)give a notice of the reasons for its decision to the administrator and to the regulator;

(b)publish the notice;

(c)25lay a copy of it before Parliament.

(6)In subsection (4), “commissioner” means a person to which the trust provides services under this Act.”

(c)in paragraph (b), omit “, if required by directions given by the Secretary of State”, and

(d)after paragraph (c) insert “;

(d)35any other person specified in a direction given by the Secretary of State.”

(5)In subsection (8) of that section, omit paragraphs (a) to (d).

(6)In subsection (9) of that section—

(a)after “representatives of” insert “the Board and”, and

(b)40for “(7)(a) or (b)” substitute “(7)(b), (c) or (d)”.

(7)At the end of that section insert—

“(12)For the purposes of this section in its application to the case of an NHSfoundation trust—

(a)in subsection (7)(b), the words “goods or” are to be ignored, and

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(b)in subsections (7)(c) and (d) and (10), the references to the Secretary of State are to be read as references to the regulator.

(13)In the case of an NHS foundation trust, the Secretary of State may direct the regulator as to persons from whom it should direct the 5administrator under subsection (10) to request or seek a response.”

(8)At the end of section 65I of that Act (administrator’s final report) insert—

“(4)For the purposes of this section in its application to the case of an NHSfoundation trust, the references to the Secretary of State are to be read as references to the regulator.”

(9)10At the end of section 65J of that Act (power to extend time limits for preparing reports and carrying out consultation) insert—

“(5)For the purposes of this section in its application to the case of an NHSfoundation trust, the references to the Secretary of State are to be read as references to the regulator.”

17615Action following final report

(1)In section 65K of the National Health Service Act 2006 (Secretary of State’s decision on what action to take), in subsection (1), after “a final report under section 65I” insert “relating to an NHS trust”; and in consequence of that, for the title to that section substitute “Secretary of State’s decision in case of NHS20trust”.

(2)After that section insert—

“65KA Regulator’s decision in case of NHS foundation trust

(1)Within the period of 20 working days beginning with the day on which the regulator receives a final report under section 65I relating to an 25NHS foundation trust, the regulator must decide whether it is satisfied—

(a)that the action recommended in the final report would achieve the objective set out in section 65DA, and

(b)that the trust special administrator has carried out the 30administration duties.